High Court rules in favor of Power Grid Corp in tax recovery dispute, orders refund to resolve double jeopardy

The High Court of Patna ruled in favor of the Power Grid Corporation of India Limited in a tax recovery dispute against the Bihar State Electricity Board. The Court found that the Corporation had faced double jeopardy due to the Board's deduction of tax amounts already paid by the Corporation. Consequently, the Court directed the respondent authorities to refund the sum of &8377;11,61,20,158.00 to the petitioner within six weeks from the date of the order. The petition was allowed, and the Registry was instructed to provide a copy of the order to the concerned respondents promptly.

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Issues involved: Recovery of tax amount by respondent from petitioner u/s 194C and 194J of the Income-tax Act, 1961 leading to double jeopardy.

Judgment Details:

The High Court of Patna heard a petition filed by the Power Grid Corporation of India Limited against the Bihar State Electricity Board regarding the recovery of a tax amount totaling &8377; 11,61,20,158.00 for the financial years 2003-04 to 2008-09 u/s 194C and 194J of the Income-tax Act, 1961. The Corporation contended that despite paying taxes regularly and having no pending tax demands, the Board had deducted this sum at the source. The Corporation had already paid taxes on the amounts received from the Board, leading to a situation of double jeopardy.

The petitioner relied on the judgment of the Supreme Court in Hindustan Coca Cola Beverage P. Ltd. v. Commissioner of Income Tax and Circulars issued by the Central Board of Direct Taxes to support their claim for a refund of the deducted amount. On the other hand, the respondent authorities cited judgments from the Bombay and Kerala High Courts and suggested that the petitioner could seek remedy u/s 119(1)(b) of the Act before the Central Board of Direct Taxes.

The Court noted that the Corporation had indeed faced double jeopardy, having paid taxes for the relevant years and having no pending demands against them. In light of this, the Court directed the respondent authorities to refund the deducted sum of &8377; 11,61,20,158.00 to the petitioner within six weeks from the date of the order. The petition was allowed accordingly, and the Registry was instructed to provide a copy of the order to the concerned respondents promptly.

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